As the semiconductor industry chain continues to rise, a large number of semiconductor manufacturers have recently begun to expand production and even plan to build new factories. As a result, semiconductor equipment manufacturers have also started a new layout.
Recently, according to media reports, Applied Materials, a leading semiconductor manufacturing equipment company, announced that it would increase the price of its acquisition of Kokusai Electric, a Japanese rival of the former Hitachi Manufacturing Co., to US$3.5 billion. It is reported that as early as July 2019, Applied Materials announced to acquire all the shares of the Japanese company at a price of 2.2 billion US dollars. Now the new purchase price is 1.3 billion US dollars (about 8.3 billion yuan) higher than the previous price.
What does Applied Materials intend to acquire a Japanese company?
Before 2018, Applied Materials had been the No. 1 supplier of semiconductor equipment in the world for decades. In the past two years, ASML’s revenue has gradually caught up with Applied Materials, threatening its dominance.
In 2019, ASML finally surpassed Applied Materials with its absolute strength in the EUV lithography machine market. According to Gartner, ASML has a share of more than 80% in the global lithography machine market. And with the popularity of 7nm and the gradual mass production of 5nm, the demand for EUV lithography machines has increased significantly, and ASML has also benefited.
According to the financial report, ASML delivered a total of 10 EUV equipment in the third quarter of 2020, and new orders reached 2.9 billion euros, of which 595 million euros came from 4 EUV equipment. ASML has also upgraded the productivity module of the EUV lithography machine, which has increased the productivity by 18% on the original basis, and improved the quasi-precision of the machine to 1.1nm. It is planned to start shipping in mid-2021. According to sources, ASML has recently shipped its 100th EUV equipment, and orders are still rising.
Compared with ASML, the development route of Applied Materials is very different. Applied Materials is taking a comprehensive development path, manufacturing semiconductor devices including atomic layer deposition (ALD), chemical vapor deposition (CVD), physical vapor deposition (PVD), ion implantation, etching, rapid thermal processing (RTP), chemical Dozens of types such as mechanical polishing (CMP) and wafer inspection equipment.
Stimulated by the shortage of wafers, the demand for EUV lithography machines is increasing, and the growth rate of ASML is also increasing rapidly. Under the strong threat it brings, Applied Materials can only increase its growth rate by continuously expanding its territory and market share through mergers and acquisitions.
With the acquisition of Kokusai Electric, Applied Materials will acquire its thin-film deposition technology, expand its product line, and further consolidate its monopoly position. And according to the data of the investigation agency, after the completion of the acquisition, the market share of Applied Materials will increase from the original 18% to more than 20%.
In this regard, Applied Materials said it “believes that this acquisition will bring full value to shareholders of Applied Materials”, “In the past 18 months, Applied Materials has observed that the long-term outlook for the entire semiconductor equipment market has become increasingly favorable, including in storage There are positive trends in the field.”
The Electronic Market Controversy between America and Japan from the Acquisition Case
And there are reports that the acquisition of Kokusai Electric by Applied Materials will pose a certain threat to Tokyo Electronics.
Some people may be surprised that Tokyo Electron is the largest semiconductor equipment manufacturer in Japan. In contrast, Kokusai Electric’s scale and global influence are much smaller than it. How can it have the ability to affect Tokyo Electron?
That’s because Kokusai Electric’s unique technologies and products can help Applied Materials make up for deficiencies, and this part of the technology and products is what Tokyo Electron is good at. It can be seen that Applied Materials is not only competing with ASML, but also intends to “erode” the market share that originally belonged to Tokyo Electronics.
According to Gartner statistics, there are 58 wafer processing equipment manufacturers above designated size in the world, of which Japan has the largest number, reaching 21, accounting for 36%, followed by 13 in Europe and 10 in North America. In terms of comprehensive wafer processing before and after, as well as packaging and testing equipment, North America and Japan are in an absolute dominant position.
Japanese companies account for up to 37% of the overall global semiconductor equipment market share. Important front-end equipment such as electron beam drawing equipment, coating/developing equipment, cleaning equipment, oxidation furnace, decompression CVD equipment, important back-end packaging equipment represented by dicing machines, and important testing equipment represented by probers In this regard, Japanese companies are very competitive.
Among the top 15 semiconductor equipment manufacturers in 2019, there are 4 American manufacturers and 8 Japanese manufacturers. Although Japanese companies have a quantitative advantage, their market share is lower than that of American companies, and most of the top five are American companies, so it seems that American semiconductor equipment is more popular. According to the research of relevant institutions, the United States is stronger than Japan in the front-end equipment of wafer processing, but it is slightly inferior in the comprehensive strength of packaging and testing equipment.
China becomes the largest semiconductor equipment market
The acquisition of Kokusai Electric by Applied Materials at a price increase reflects its good expectations for the semiconductor manufacturing equipment market, and also fully demonstrates the current degree of fiery in the semiconductor market. According to the semiconductor equipment market year-end forecast report previously released by SEMI, it is expected that the total global semiconductor manufacturing equipment sales in 2020 will increase by 16% on the basis of 59.6 billion US dollars in 2019, setting a new industry record of 68.9 billion US dollars.
Moreover, the growth potential of the global semiconductor equipment market in the next two years is also very strong. It is estimated that sales of US$71.9 billion will be achieved in 2021, a year-on-year increase of 4.4%; in 2022, it will further rise to US$76.1 billion, a year-on-year increase of 5.8%. Therefore, some semiconductor manufacturers are more determined to expand their business goals, and will increase the price for acquisitions.
At the same time, the global semiconductor industry is still shifting to China, and China has begun to become the largest semiconductor equipment market. With the advantage of low labor costs, China has continuously introduced advanced technologies in the semiconductor industry, strengthened the training of talents in the semiconductor industry, and gradually undertaken the low-end semiconductor packaging and testing and wafer manufacturing business.
With the development of the global electronic process and the rapid development of downstream industries, China’s semiconductor industry continues to thrive. The proportion of the global semiconductor equipment market in mainland China is increasing year by year. SEMI predicts that the semiconductor equipment market in mainland China will reach US$18.1 billion in 2020, a year-on-year increase of 34.6%, making it the world’s largest semiconductor equipment market. After the fab-intensive capital expenditures in 2020, SEMI expects the semiconductor equipment market in mainland China to decline slightly in 2021, with a market size of US$16.8 billion, down 7% year-on-year.
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